De montfort University Niels Brock Business College

United kingdom Copenhagen, Denmark

PRODUCTION AND MARKETING OF HYDROELECTRIC ENERGY IN NEPAL

Module: HUMS3006

Module Tutor: Hurlum Heisah

DMU ID: P1400398x

P140x3547

P14x03564

P1400366x

Words count: 2190

17 November 2014
TABLE OF CONTENTS

ABSTRACT...xiii

1 INTRODUCTION ...........................................................................................................................1

1.1 Brief History.1

1.2 Production of hydropower energy in Nepal .1

2 ANALYSIS

2.1 List of Figures and Tables of Hydropower Electricity in Nepal 2

2.2 Future planning of hydro power projects in Nepal..3

2.3 Hydro energy capacity in Nepal .4

3 RELEVANCES

3.1 Benefits ..5

3.2 Problems...6

3.2.1 Barriers of hydropower development in Nepal.6

3.2.2 Disadvantages of Hydropower..7

4 POSSIBITY OF HYDRO ENERGY MARKETIN NEPAL..8

5 OPTIONAL RENEWABLE SOURCES. ..9

6 NEA (Nepal Electricity Authority) and Its Roles...10

7 CONCLUSION...11

8 RECOMMENDATIONS...11

REFERENCE LIST....12
ABSTRACT

One of the most important components of socio-economic development is any form of energy. The

energy sector is dominated by the traditional energy sources such as fuel woods, crop residence and

animal dung. Currently, only 40 percent of the people have access to electricity in Nepal which is very

low in comparison to its true capacity to produce electricity. This look very unrealistic. But the fact is

people in Nepal can have a decent life if the government can produce half of its capacity to produce

hydroelectricity. The development of hydroelectricity will lead to an overall development of Nepal

gradually. This report presents a brief account of the production and marketing of hydroelectric power

in Nepal within careful study of its insights reasons. Finally the paper presents some recommendations

for the promotion, development and implementation of hydropower in Nepal.

Xiii
1 INTRODUCTION

1.1 Brief History

The first hydropower plant was built in Wisconsin USA by using the fast flowing river as its source. The

history of electricity development of Nepal is old as it crossed 100 years since the start of construction

of Pharping Hydropower Plant ( 500 KW) in 1911 A.D. which was established by Prime Minister Chandra

Sumsher Rana to meet the energy requirements of the members of the ruling Rana families. Presently,

Nepal has an electric power of total installed capacity 609 MW in Integrated Power System. However,

this much electricity is not meeting the people demand and Nepal is buying electricity from neighboring

country to minimize the high demand. So, because of this there is irregular supply of electricity called

load-shedding.

1.2 Production of hydropower energy in Nepal

Hydropower is an extremely flexible technology for power generation. The method of production of

electricity from the energy stored in running water is called hydroelectricity. All the rivers and some

lakes have potentiality of generating electricity. Water resources in Nepal are the golden gift by the

nature within this small limited geographical boundary. Nepal is richest country in water resources in

the world after Brazil. And it is the first country in the world which has capacity of producing 83,000

Mega Watt (MW). It is the renewable sources of energy depend upon the hydrological cycle of water,

which involves evaporation, precipitation and flow of water due to gravity.

2 ANALYSIS

2.1 LIST OF FIGURES AND TABLES RELATED TO HYDROPOWER ELECTRICITY.

Source; http://www.sari-energy.org/pagefiles/countries/nepal_energy_detail.asp

2.2 Future planning of hydro power projects in Nepal

The Nepal Electricity Authority [NEA] is poised to construct 3300km of transmission lines and 64 sub-

stations in the coming decade. The government of Nepal has prepared a plan for the development of

10,000MW and 25,000MW of hydropower for the coming 10 and 20 years respectively. However,

concrete action in this direction has not been initiated. Two large and attractive projects for exporting

power to India are the 900MW Arun-III Hydroelectricity Project and 900MW Upper Karnali

Hydroelectricity Project which were awarded to Satluj Jal Vidhut Nigam (Govt. of India undertaking), and

GMR of India through global bidding. Other important projects are the West Seti (750 MW) storage

project which was awarded to a Chinese company through negotiations. A 400MW storage project

Nausyalgad in west Nepal is also under feasibility study while the Upper Tamakoshi hydropower project

(456 MW) with 850m head is under implementation with local resources. Six projects (totaling about
209MW) awarded by DoED through bidding are awaiting PPA and are ultimately expected to go for

construction. The Karnali Chisapani (10,800MW) storage multipurpose project is an attractive project

whose feasibility study has been done. However implementation is only possible if the Indian market is

opened up. Furthermore, the 6450MW Pancheshwar multipurpose project on the River Mahakali border

has been in the pipeline for joint development by India and Nepal. After almost 16 years there is still

little progress. Detailed study is ongoing for the 3000MW Sapta Koshi project basically designed for

flood control in India and Nepal. However, again, progress has been very slow for various reasons.

(Hydropower promise in Nepal, 5 March 2013)

2.3 Hydro energy capacity in Nepal

The average rainfall in the country is about 1500mm a year, out 80% of which falls in the monsoon

season (mid-June to early September). Nepal is rich in hydropower with 83,000MW of theoretical and

42,133MW of technically/financially viable potential. A recent study has shown that the total capacity

based on the run-of-river basis at Q40 (flow exceedAnce) and 80% total efficiency is 53,834 MW; with

annual energy potential at 346,538GWh. With storage projects, the potential will increase substantially.

However, even with this enormous potential and a 100-year history of hydropower development, the

total installed capacity, at present, is a mere 730.47MW. (Hydropower promise in Nepal , 5 March 2013)

Indeed over the past four years there has been a severe electricity deficit, inducing painful load

shedding.
3 RELEVANCES

Hydropower has become one of the best energy alternatives for Nepal, because of the following

reasons:

Puts a minimum damage on resources

Water is Nepals most important and abundant domestic resource and it can help reduce the countrys

dependence on foreign energy suppliers. Water being richest domestic resources which helps to

minimize foreign dependency on energy.

Construction of hydro power project can serve as the backbone for the overall socio-economic

development of the nation.

3.1 BENEFITS

It Water is a pollution-free source of energy which can contribute to a sustainable reduction

emission of carbon-dioxide and other harmful gases responsible for greenhouse effects. So,

hydroelectricity is only the net effect of generating the replacement of pollution free source of

energy to decrease air pollution and greenhouse gas emissions (J. Kotchen et al, p-385). If the

government or any related organization takes a step forward for the development of hydroelectric

energy in Nepal then the issue will leads to the other development prospects knowingly or unknowingly.

The development prospects like agriculture, industries etc. will develop gradually with the help of

electricity. With the use of electricity the development activities can move in a modern way. Following

are the major benefits;-

The main advantage of hydro power projects are those projects that have low energy production cost

as compared to other forms of energy, along with low maintenance and operating operation cost and

also have a long operating life.

 Produces non-polluting clean and environmentally friendly energy.

Storage based hydro projects Hydro-electric dams help to control flooding, and also provide benefits

for irrigation purposes, supply of clean drinking water, opening of opportunity for the improvement of

inaccessible and backward areas.

Hydro power project serves as a clean, renewable resource, which plays an important role in the

socioeconomic development of Nepal. Construction of hydroelectric projects provides safe, reliable,

sufficient, and affordable electricity for domestic consumption and industrial use.

Hydro power project helps the nation for earning revenue from the export of hydroelectricity by

providing much needed capital to financial social projects and achieve economic self-reliance.

3.2 PROBLEMS

Although the geographically Nepal is a small country between India and China but it has very huge

potentiality for hydroelectricity production than its neighboring countries. The country has lots of water

resources for hydroelectricity production but it is still facing load shedding (power-cut) problem. This

has a very adverse effect on its overall development process. To point out the various reasons most

notable is the instable governments and corruption. There is huge corruption and disturbances by the

related parties in the case of hydro energy development.

3.2.1 Barriers of hydropower development in Nepal

There are numerous barriers constraining hydropower development in Nepal. A lack of political stability,

good governance and law and order issues are important factors hindering progress and economic

growth. Frequent changes of ministers and the government, lack of inter-governmental agency co-

ordination, prolonged processes and procedures for environmental clearances from the government,
and a long list of inordinate local demands have been posing a major threat to hydropower

development in Nepal.

Environmentally, the Himalayan geology is young and fragile; hence, there is the risk of earthquakes and

landslides. Controlling sediments in the hydro projects is also a challenge. Most of the Nepali rivers have

little discharge in the dry season but become wild in the monsoon season. The effects of climate change

in Nepal are visible and there may be little snow cover in the glaciers and Himalayas in the next 50 years.

In some cases, the risk of glacier lake outburst flood may be a major threat to hydropower development.

A defined community development policy of granting small shares to local and affected people may

create goodwill and support for hydro developments.

3.2.2 Disadvantages of Hydropower

As it is a universal truth, everything in the universe has their own advantages as well as disadvantages.

So constructing hydropower projects also have a number of disadvantages. Some of them are as follows:

The main current problem of Nepal is load shedding (power cut) almost 8 hours a day, mostly in

the summer time this is because of hydro plant, because they can only be able to produce

electricity when the flow of water is sufficient. Hence, during the dry season the production is

not enough which lead to power cut, which is the most common problem, faced by the

Nepalese citizens at the moment.

Another disadvantage of hydroelectricity project is it decaying the life of a plant from lake which

may generate greenhouse gas emission. So assembling of hydropower dams also lead to

changes in the ecosystem, which may cause the damage to natural herbs and inhabitants of

wildlife habitats and those rare species will be in a serious situation.

 Constructing hydropower dams also effect annual agriculture and forestry products from the

land utilized by the project. So such land used by the project is lost forever at the national level.

4 Possibility of hydro energy market in Nepal

There is a large unmet demand for electricity in India. There is a possibility of a good market in India for

Nepal's hydropower. However, importing electricity in India is a restricted procedure which needs

clearance from three Indian ministries. There is the potential to export hydropower power from Nepal

to India in summer when there is lack of power. India is a big country with huge population. The power

demand of India is very high. It has played a huge role in the development of electricity in Bhutan which

is selling its power to India. It has benefitted to both of countries. Similarly, Nepal can sell its electricity

to China also. India and China both can play a very positive role in the development of hydroelectricity in

Nepal. From the development of hydroelectric energy in Nepal both the country will have immense

profit.

In comparison with hydropower development, Nepal's transmission lines have been given less priority.

Hence, there have been problems of power evacuation. Several major transmission projects are planned

and under implementation at present.

5 Optional renewable sources

Wind energy:

Under the support of the Danish government in 1987, one of the biggest wind power projects has been

installed by the name of Kagbeni wind power project with the capacity of 20kw but due to lack of

maintenance this project was not carried out time and again. Then again in 2007/08-2009/10 the

government introduces three year plan the successful implementation of the project is delayed because

of the insufficient research and complicated geographical landscape.

Biogas:

Gobar gas(dry dung), which is normally known as biogas plant used by local people almost from 75

district of a country. With the registration of 2 two major projects in 2005 it has become the first clean

development project of Nepal and second largest to improved cook stoves program for the alternative

rural energy program in Nepal.

Biomass:

Almost 80% of the total population of Nepal relies on solid biomass fuels such as wood, dung and even

from the agricultural filtrate for cooking, which lead to indoor air pollution which is the major problem

of Nepal.

Solar Energy:
Solar energy devices are gaining more popularity in major parts of Nepal. It is a huge potential for solar

thermal devices such as solar water heaters, solar cookers, with the average sunlight hours of 6.8

hour/day. But this technology is not suitable in the region where temperature frequently fall down in

winter season.

6 NEA (Nepal Electricity Authority) and Its Roles

As a predominant player in the country's power sector, NEA has a crucial role to play to provide

adequate and reliable electricity services to its consumers at an affordable price. Although with the

introduction of Nepal Electricity Act, 1992, the country opened its power sector for private sector

investment, and accordingly, a number of independent generation companies have added capacity of

the Integrated Nepal Power System . On the behalf of financial performance, in fiscal year 2013/13, net

revenue from sales of electricity amounted to NRs. 27,624.28 million, an increment of 8.95% over the

preceding fiscal years sales revenue. On the other hand, NEA is running some power plant project to

remove load-shedding as listed below:

Construction of Kulekhani-III Hydroelectric Project (14 MW), a cascade scheme of existing Kulekhani-

IIHydroelectric Project (32 MW).

Construction of Chameliya Hydroelectric Project (30MW).

The construction of Upper Trishuli -3A Project started from 1st June 2011.

Rahughat Hydroelectric Project (32 MW).

7 Recommendation

Although the singe energy source is not enough to fulfill the energy need of the whole nation, other

renewable energy sources such as biogas, biomass, solar energy etc. also need to go hand to hand to

satisfy the basic energy needs to guide the energy diversification. Produced energy can be saved by

utilizing them in proper ways such as, fuel and gas can be used only for cooking purposes , whereas grid

and non-grid solutions for electricity supply and other sources should also be adopted wherever

appropriate. Using energy sources for the purposes for which they are best suited makes their use more

efficient and facilitates energy preservation. Using gas and bio-fuels primarily for cooking and electricity

supplied through the grid would be one example of this.

8 Conclusion

Conclusively, Nepal has a vast amount of natural energy resources but due to the political and economic

situation of a country these resources has been harnessed which allow all the renewable sources to

contribute less than 1 percent of the total energy consumption. Hence, the construction of a hydro

power system project would plays a vital role in improving the overall economic prosperity of Nepal and

reduce poverty. to raise economic condition of a nation as well as it also lead to the reduction of a

poverty.
9 Reference List

Environmental Constraints on Hydropower:

By: Kotchen, Matthew J.; Moore, Michael R.; Lupi, Frank; Rutherford, Edward S. Land Economics.

Aug2006, Vol. 82 Issue 3, p384-403. 20p. 1 Diagram, 6 Charts.

http://www.nrb.org.np/ecorev/pdffiles/vol18_art4.pdf

Accessed on 10/11/2014

http://www.sari-energy.org/pagefiles/countries/nepal_energy_detail.asp

Accessed on 10/11/2014

Hydropower promise in Nepal, 5 March 2013,

www.waterpowermagazine.com/features/featurehydropower-promise-in-nepal/

Accessed on 14/11/2014

NEPAL ELECTRICITY AUTHORITY

http://www.nea.org.np/images/supportive_docs/Annual%20Report-2014.pdf
Accessed on 14/11/2014

Nepal Electricity Authority (NEA)

http://www.nea.org.np/images/supportive_docs/Annual%20Report-2011.pdf

Accessed on 16/11/2014